While US public pension schemes have been known to target niche private equity vehicles, it is relatively uncommon for their UK counterparts to do so - especially at the small end of the market.

South Yorkshire and Merseyside pension schemes have previously invested in vehicles targeting large private equity deals.

Davies plans to raise a second private equity fund once the capital from the current fund has been deployed, pointing out that proof of concept will make it less difficult to attract institutional investors - especially fund of funds working with smaller pension schemes.

"It was always going to be difficult to raise capital for a first-time team launching a first-time fund - it isn't a natural investment for a pension fund," he said, pointing out that his team approached around 350 potential LPs when it already had a £10m war chest and had begun to do deals.

The fund has invested an estimated £5m in three businesses.

"Typically, fund of funds will talk to us, then maintain a dialogue before eventually committing pension-fund money," Davies said.